The Financial Sector Conduct Authority (FSCA) told Business Maverick that the reason for such a massive deduction in Markus Jooste’s fine was due to the Financial Sector Tribunal ordering that a different date be used to calculate the amount of the financial loss that was avoided as a result of the insider tip.

In October 2020, the FSCA imposed an administrative penalty of R161.6-million on Jooste for breaching the Financial Markets Act when he sent Jaap du Toit, Gerhardus Burger, Marthinus Swiegelaar and the late Ockert Oosthuizen text messages warning them to sell their Steinhoff shares. 

The incriminating text message, translated into English, read: “You always ask my opinion, it will take Steinhoff a long time to work through all the bad news and America. So there are better places to invest your money. Take the current price immediately. And delete this SMS and don’t mention it to anyone.”

Jooste took the FSCA ruling of 2020 on appeal and the Financial Sector Tribunal set the decision aside last December, advising the FSCA to recalculate an “appropriate administrative penalty” on the grounds that the contents of the SMS were “vague and imprecise”.  

When the FSCA went back to the drawing board, it took into consideration the amounts of the losses avoided by the recipients of the warning SMS as a result of the offending transactions, Jooste’s level of cooperation during the investigation, the seriousness of the breaches, the need to deter such conduct, as well as Jooste’s submissions regarding the merits of the case, and an appropriate penalty.

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In a statement the FSCA clarified that R1-million of the penalty was levied for encouraging Jaap du Toit to sell his Steinhoff shares, even though Du Toit did not act on the contents of the cautionary SMS. 

The Tribunal also ruled that the text message to Swiegelaar should not be considered insider trading as it accepted Jooste’s submission that this was a “pocket dial” and the message was never meant to go to Swiegelaar.

Jooste also submitted that since insider trading is not rife, there is no pressing need for a deterrent penalty. However, the FSCA disagreed, contending that insider trading is the contravention most often referred to it for investigation.

The Financial Markets Act prohibits an insider from tipping (encouraging or discouraging) another person to deal in securities which the inside information relates to. Jooste has to cough up the R20-million by 6 January 2023.

Gerard van Deventer, divisional executive of enforcement, says it is important to note that this is just one part of a much larger case. 

“The investigation into the false financial statements is ongoing and we are also actively assisting the National Prosecuting Authority,” he says.

Two months ago, the South African Reserve Bank moved to seize Jooste’s assets worth around R1.4-billion or more. 

Assets seized include Lanzerac Wine Estate in Stellenbosch, four pieces of land linked to boutique winery Klein Gustrouw in Stellenbosch, the content of Jooste’s Hermanus compound in Voëlklip, the Jooste family’s Silver Oak Trust and five cars registered to Jooste’s wife and chauffeur. BM/DM